ASSIGNMENT NO.

1
1. If you were a supplier of funds, how much return (interest, dividend) do you want to
earn?
Answer: If I were a supplier of funds, let’s say I am an investor, we know that
investors are in the business of putting money into growing businesses so they can
make money. I invest, so I want a return on my investment. By how much? Well,
I am just a human, definitely I want a high return. But I know that the return that I
will receive depends on the investment that I made. In order to get high return, I
will make a high investment though it requires a lot of planning, I can’t decide
eventually because this also involves a higher risk. But the question here is how
much, so I think of 50% interest of profit of the business.

2. If you were a demander of funds, how much interest or dividend are you willing to
pay?
Answer: As for this case, of course I want to pay low interest but I’ m willing to
pay whether how much interest the lender will charge as long as it is not against
the law, as long as it doesn’t violate my right as demander of funds. I won’t let
anyone take advantage of my situation. So, it is important to discuss it clearly
with the lender and it should be in writing, with that, there will be no problem, I
am willing to pay for as long as it is what we both agreed.

3. If you have a firm of your own, how will you raise money for the firm? private
placement or public offering? Support your answer.
Answer: I will raise money for the firm through private placement. The reason is
it allow me to choose my own investors – this increases the chances of having
investors with similar objectives and means they may be able to provide business
advice and assistance , as well as funding allow me to remain a private company,
rather than having to go public to raise finance, provide flexibility in the amount
and type of funding. It also allow me to make a return on the investment over a
longer time period – as private placement investors will be prepared to be more
patient than other investors, such as venture capitalists requires less investment of
both money and time then public share flotations provide a faster turnaround on
raising finance than the venture capital markets or public placement. The reason
why I don’t like public offering is because of market pressure. Market pressures
can be very difficult for company leadership who are used to doing what they feel
is best for the company. Founders tend to have a long-term view, with a vision of
what their company will look like years from the present and how it will impact
the world. The stock market, on the other hand, has a very short-term, profit-
driven view. Once a company is public, its every move is scrutinized by investors
and analysts around the world, who are generally interested in one question: “Will
this company meet its quarterly earnings target?” If a company meets its target, its
stock price will normally increase; if not, its stock price will normally
decrease. Even if leadership is doing what is best for the company in the long-run,
failing to meet the public’s short-term goals may cause the company to lose value
and the leadership might be replaced as a result.